>They take on the entrepreneurial risk and if they're successful Amazon will know exactly how many goods they sell to which customers and from who they get those goods.
What "entrepreneurial risk" are they taking there? Sending the initial batch of products over and creating a product listing? Are they involved with the design/creation of the product itself? If they're just taking already designed/made products and reselling on amazon, and amazon's cutting them out, I can't say I feel sorry for them losing their middle-man position.
> What "entrepreneurial risk" are they taking there
If there was no entrepreneurial risk, why wouldn't Amazon just use it's AI to predetermine all the successful combinations of product+supplier+customers ? There would be zero reason for Amazon to allow third party sellers, except for very niche areas. This is a very predatory practice and I'm amazed they're allowed to do it.
some people’s news choices begin and end on Facebook. Does that mean Facebook would have a monopoly on news if it that market shared increased enough? What’s stopping people from just typing in a non Amazon.com address into their browser?
I get maybe for the older population but that’d put a 10-20 year cap on Amazon dominance before the majority of their customer base understands the internet enough to look for alternatives if amazons service isn’t good enough.
You ask that about Facebook and thanks to the recent outage we can already see that YES Facebook is having a significant impact on traffic to non-Facebook news sites. When Facebook went down earlier this month there was a 40% spike in traffic to news sites during the outage.
Now imagine a company that has been just as effective as Facebook at replacing/consuming/killing it's competition in the retail space and you've got Amazon. If Amazon went down for a proportional extended period, say for a few days, you'd likely see a massive spike in sales at other retailers just as we saw a massive spike in new site traffic when Facebook was down.
That's true, but I think there's a solid case for why this type of practice is anti-competitive and unfair.
Let's say I own a restaurant and instead of improving my food or service I go to my competitor's food suppliers and offer them extra money to not sell to any of my competitors. In isolation, there shouldn't be anything wrong with me making an agreement with another private corporation, but the effect of this is that it creates an unfair playing field for my competition.
Amazon's position as both the marketplace and a competitor in that marketplace, creates very similar "unfair" circumstances that benefit them uniquely on that marketplace (for example placing their offerings higher up in search results, or creating special "recommendations" specifically for their offerings, etc) not to mention, the unique access to information that they have into how well their competitors do (which is not inherently unfair, but when combined with all of the other aspects does make a decent case for fitting the "unreasonably constraining competition" section of anti-trust law)
With your restaurant example, you are describing an "exclusive dealing agreement". This usually takes monopolistic conditions to become illegal.
Personally I don't like what Amazon is doing. But I don't think it is illegal under current anti-trust laws. The laws really need to change, but I don't see that happening.
You're right it definitely doesn't fit neatly under any current anti-trust laws.
I think the justification for why something like exclusive dealing agreements in monopolistic conditions is unfair could definitely be applied to why being a competitor in your own marketplace, while leveraging your customer's data, and boosting your own listings could be deemed unfair and lead to monopolistic conditions too.
They're taking on financial risk but I wouldn't call it entrepreneurial risk. They can list any number of products at time, risking nothing but money. There's nothing innovative or novel being added to the world.
The closest thing to entrepreneurial risk is the "creating demand" claim but that seems unlikely to be very true in most cases. In most cases, they're likely capturing demand on Amazon itself by being among the first to list a product.
It seems pretty clear that they're arbitraging and Amazon is taking advantage of its position to out-arbitrage them. In many cases, it seems reasonable to assume Amazon would've tried selling the product themselves regardless.
These arbitragers probably just have to accept that the reward for finding new products to arbitrage is very time-limited, because if Amazon doesn't start competing with them, someone else will.
This is a great example of a ruthlessness, but highly functional, capitalist market. It seems to work out great for consumers, all things considered.
And, importantly, it's also their money. Perhaps personal, perhaps a loan. But they don't get to just pull in VC funding under the assumption that they can burn through it, close shop, and carry on like nothing happened. This is the real entrepreneurial risk.
They pay Amazon for that middle-man position already. And then Amazon gets to determine that it's more profitable for them to also compete with you in addition to taking the cut from your sales.
I find it interesting the FedEx hasn’t entered this market by purchase someone like Square and competing with Amazon. At this pace, left unchecked, Amazon is going to destroy their business as well.
I don't know about the US, in Europe FBA (Fulfillment by Amazon) is getting competition from affiliates from Hermes (the logistics arm of Otto Group, one Amazon's biggest competition in Germany) and others. Multi marketplace capability and cost being among the main reasons.
What "entrepreneurial risk" are they taking there? Sending the initial batch of products over and creating a product listing? Are they involved with the design/creation of the product itself? If they're just taking already designed/made products and reselling on amazon, and amazon's cutting them out, I can't say I feel sorry for them losing their middle-man position.